Walgreens cuts manager bonuses following employee benefit changes

Genevieve Bookwalter / TNS

Walgreens is slashing bonuses received by store managers and others in management, in many cases by thousands of dollars each -- a move that follows a series of changes to the store's employee benefits.

Walgreens is slashing bonuses received by store managers and others in management, in many cases by thousands of dollars each -- a move that follows a series of changes to the store's employee benefits. (Genevieve Bookwalter / TNS)

Walgreens is slashing bonuses received by store managers and others in management, in many cases by thousands of dollars each – a move that follows a series of changes to the store's employee benefits.

Deerfield-based Walgreens told managers about the cuts to their bonuses in late October, according to sources familiar with the situation.

Store managers and others receive annual bonuses based on a number of factors, including individual, store and company performance. This year, those bonuses were much lower than what store managers typically receive and expected to get, sources said.

Walgreens spokesman Brian Faith declined to discuss employee compensation, other than to say that the bonuses in question typically go to management and executive employees. Walgreens has more than 9,500 stores in the U.S.

Earlier this year, Walgreens pledged to spend $100 million to raise the wages of hourly store workers. Those raises took effect Oct. 1 and were expected to benefit about 100,000 of Walgreens’ 170,000 store workers.

“We remain confident that with the offer we have at local level and the way that we treat our people in stores, look after them in different ways, that we'll remain a very, very competitive employer,” Walgreens Co-Chief Operating Officer Alexander Gourlay said during the company’s October earnings call, in response to a question from an analyst about hiring and retention, given Amazon’s recent decision to boost wages.

Last month, Amazon said it would increase employee pay to at least $15 an hour, but it also decided to get rid of monthly bonuses and stock awards for warehouse workers and other hourly employees.

The Walgreens bonus cuts took many store and other managers by surprise, though they come amid a number of other changes to employee benefits.

The drugstore chain recently decided that starting in 2019, employees won't qualify for paid time off unless they work at least 30 hours a week, versus 20 hours currently. Walgreens also decided to eliminate health insurance for a number of its eligible retirees after 2019.

The company also, however, is adding a paid parental leave benefit that will offer full pay for eight weeks of leave to new mothers and fathers. Also, it is expanding short-term disability leaves for hourly employees working at least 30 hours a week.

In its recent fourth-quarter earnings, Walgreens beat estimates with earnings per share of $1.48. Sales also rose nearly 11 percent to $33.4 billion from the fourth quarter of last year, though that was lower than analysts’ expectations.